TELECOMMUNICATIONS: Which broadband policy should Australia adopt?

by Francis Young

News Weekly, May 25, 2013

On paper, the September 2013 federal election should see Labor ousted. However, its visionary fibre-to-the-premises (FTTP) broadband policy has 78 per cent voter support and is a vote-changer for some conservative voters. Could the Liberal-Nationals’ allegedly cheaper fibre-to-the-node (FTTN) proposal deliver another minority protest vote for FTTP, which cost it victory in 2010?

Three years ago, I proposed that broadband might be a sleeping election issue in regional Australia, where isolation, vast distance and lack of local services can be partly offset if fast, reliable broadband is available and affordable to those of us in the bush (News Weekly, July 24, 2010).

Six days before the August 2010 poll, Tony Abbott finally revealed that he would not deliver Labor’s FTTP, nor separate Telstra’s retail arm from its copper monopoly. He would pay Telstra to build fibre nodes (FTTN) to expand ADSL.

Failure to deliver FTTP for towns (as implied in the Nationals’ policy platform) swayed enough regional voters to derail outright the prospect of a Coalition victory. Moreover, the Coalition’s refusal to budge on FTTP post-election saw three independent MPs decide to prop up a minority government consisting of pro-fibre Labor and Greens.

Last week Tony Abbott and Shadow Communications Minister Malcolm Turnbull told the media scrum at the premises of (Telstra-owned) Fox that, if elected, they would still refuse to deliver FTTP to existing premises. Their “fast, affordable, cheaper” plan buys back Telstra’s ageing copper wires and constructs 60,000 refrigerator-like cabinets at close intervals to extend the reach of ADSL on copper.

Amazingly, it is exactly the same FTTN plan for which Telstra unsuccessfully sought a large handout from the Howard government in 2005, and which Tony Abbott’s 2010 election subsidy would have seen built.

Why is FTTP superior? Fibre has no bandwidth (data-capacity) limit and lasts 60 to 100 years. Every broadband technology operates just under the speed of light, but a glass fibre can carry millions of distinct colours, each of which carries data. Only fibre offers limitless bandwidth with no appreciable signal loss, even between cities. No electrical components are required from exchange to premises, and the fibre is unaffected by floods or electrical noise.

Copper lasts just 30 years, says Telstra, so most taxpayer-built copper is now on borrowed time, and copper costs Telstra $1.3 billion annually to maintain. Copper bandwidth drops sharply with distance as the high frequencies are drowned out by line noise, even with wires twisted into pairs. FTTN cabinets can shorten the copper distance to traverse, but cannot fix water-damaged cables. To get faster speed, you must lay new copper and build ever more closely-spaced cabinets.

Likewise for the best wireless service, you deliver fibre to Wi-Fi access points (Wi-Fi is wireless networking technology that uses radio waves to provide wireless high-speed Internet and network connections), so fewer outdoor mobile towers are needed and they are less congested.

Ironically, Mr Turnbull has now warmed to many of the supposedly terrible elements he described in over three years of anti-NBN scripts he provided to Coalition MPs to read in late-night extended sittings and extra parliamentary sitting days at taxpayer expense.

Mr Turnbull has now completely adopted:

• an off-budget NBN funding model, selling bonds to fund the construction, then repaying them from wholesale revenue from end-users (however, the Coalition’s preferred FTTN will attract smaller revenues);

• a monopoly wholesaler role for NBNCo, whereby the competitive market of retail service providers must lease access exclusively from NBNCo in order to sell broadband to customers (NBN monopoly would sink Telstra’s then $2.56 share price, which has since soared past $4);

• use of wireless broadband for just 4 per cent (he previously advocated wireless for everything); and

• Labor’s view that by the 2020s every urban premises will need future-proof optical fibre (but he won’t offer to build it).

The Australian Financial Review recently opined that the Coalition has now adopted 90 per cent of Labor’s plan, and should logically adopt the smartest 10 per cent — laying optical fibre to premises.

Apart from two editorials quoting the Turnbull script, and NBN nay-sayers Grahame Lynch and Kevin Morgan, every mainstream and technical column in recent weeks has said exactly the same thing: we should build fibre to premises now.

Why? Because FTTP will be no dearer or slower than renegotiating contracts with Telstra and fixing degraded copper. It will last at least 60 years. Future speed upgrades need no expensive digging. And FTTP revenues will be much higher than FTTN revenues, so it will be entirely user-funded.

Did Labor really promise in 2007 to build fibre to premises for $4.7 billion, and will it now cost $94 billion? No, Labor abandoned a 2007 FTTN plan when the cost topped $31 billion, including compensating Telstra to relinquish its copper wires.

During a famous flight to Darwin, Senator Stephen Conroy explained to Kevin Rudd that for $44 billion we could achieve industry’s long-expressed endgame of ubiquitous FTTP. Australia is as highly urbanised as the Asian and European countries where FTTP was already proven. Telstra involvement reduced the $43 to $38 billion. Numerous inquiries and parliamentary committees over later years all put FTTP cost in the $38-50 billion range.

So, is the Coalition plan really “fast, cheaper, affordable”? No.

Telstra can again name its price for the copper. Changing the Telstra contract will delay the Coalition plan. Degraded copper and inevitable contractor issues will blow out construction times. There is no allowance to maintain the eight car batteries, cooling systems and electronics in each node. The annual $1.3 billion copper maintenance cost and even the electricity for the 2 KW nodes are missing. The Coalition’s stop-gap FTTN will cost at least $40 billion — about the same as Labor’s FTTP.

Critically, FTTN will not even be affordable, because wholesale revenues will suffer since households get less value in substituting other costs for services. FTTN will not fund $40 billion of construction, but FTTP will.

Finally, does a household need fibre speed? This is actually a secondary question. The speed of data transfer is not the most important feature of an optical fibre network.

Rather, it is the reliability and lack of congestion that most benefit families, businesses, educators and health-providers wishing to engage with people at their homes.

Saying “this really should be working” doesn’t help patients who miss their 20 minutes with a $300-an-hour specialist waiting at the other end of the line.

Australians move house typically every seven years. Ubiquitous fibre removes the uncertainty that moving house might thwart your home business.

Yet speed is also important, including upstream speed. Multiple users of fast broadband each feel that they have it to themselves. A sudden Windows update or large file transfer does not spoil TV for someone else.

Home computers can be backed up offsite with ease, and recovery is faster. Dispensing with copper telephone lines also means no phone call costs, because all voice and video calls are just part of your data, with excellent voice and picture quality. FTTP is truly the endgame.

Mr Turnbull has now adopted Labor’s NBN outside towns and cities: 3 per cent get satellite, and 4 per cent get fixed wireless from a rooftop mast. Both are on track for 2015 completion, delivering 25 Mbps.

But now is also Australia’s moment to build FTTP in all towns and cities. The electorate knows it. Mr Turnbull knows it. He has delivered a 2005 Telstra FTTN policy proposal eight years too late, and FTTP is Labor’s only hope as September looms.

Francis Young has worked in IT since 1981 and now lives in the Hunter Valley, New South Wales, Australia.